High Income Child Benefit Charge - Opted in mid year

Kate489130

Hi, can anyone help clarify this for me?

We received notification from HMRC in Nov 24 of changes to HICBC thresholds. Because of the new thresholds (£80k top end), we opted back into CB from Aug 24 (backdated 3 months) after opting out in previous years. We were paid £1,100 in CB and husband earned approx £76k in 24/25. 

Self-assessment now says we need to pay back 80% of what was paid, so we only keep £230. If we’d been in from April, we’d have kept approx £465.

Is this right? I thought the charge was based on what would’ve been paid across the whole year, not just from when we opted in.

Dazed_and_C0nfused

Kate489130 said:

Hi, can anyone help clarify this for me?

We received notification from HMRC in Nov 24 of changes to HICBC thresholds. Because of the new thresholds (£80k top end), we opted back into CB from Aug 24 (backdated 3 months) after opting out in previous years. We were paid £1,100 in CB and husband earned approx £76k in 24/25. 

Self-assessment now says we need to pay back 80% of what was paid, so we only keep £230. If we’d been in from April, we’d have kept approx £465.

Is this right? I thought the charge was based on what would’ve been paid across the whole year, not just from when we opted in.

I don't really understand the point you're trying to make to be honest.

If the charge was based on what you could have been paid then that would mean you could pay back more than you actually received 😳.

Wouldn't it also mean everyone who opted out and had adjusted net income of say £90k would have to pay 100% of the Child Benefit they didn't receive back, effectively making opting out utterly self defeating 🤔

Kate489130

Sorry, I've not explained it well!

Had we been paid child benefit over the whole year, we would have received £2212 and had to pay back £1770, so the 20% we would keep would be around £440. However, because we only opted in to child benefit part way through the year, HMRC only take us as being entitled to CB from the date of opt in, even though we were always entitled to it. I didn't expect payments to be backdated, but I thought the tapered amount when calculating the charge would apply as if we had been entitled to the child benefit for the whole year, rather than just from the point of opting in.

Dazed_and_C0nfused

Kate489130 said:

Sorry, I've not explained it well!

Had we been paid child benefit over the whole year, we would have received £2212 and had to pay back £1770, so the 20% we would keep would be around £440. However, because we only opted in to child benefit part way through the year, HMRC only take us as being entitled to CB from the date of opt in, even though we were always entitled to it. I didn't expect payments to be backdated, but I thought the tapered amount when calculating the charge would apply as if we had been entitled to the child benefit for the whole year, rather than just from the point of opting in.

That is what's happened though.

The taper range is now £20,000 (£60-80k).

Assuming you meant his adjusted net income was £76,000 then the HICBC charge would be based on 80%* if the Child Benefit.  Which is what you said it was in your original post.

*£76,000 being 80% of the way from £60k to £80k

Isthisforreal99

What might have hapened had you received the CB for the full year is irrelevant tbh. The calculation is based on what CB was paid against the earnings for full year.